Here are a few of your digital assets to consider: bank accounts, email accounts, Facebook page, Linked In profile, online photo albums, blogs and websites. They’re likely to be around long after you are gone.

This is still a relatively new area of estate planning. What often happens is that heirs think they can simply find and use the decedent’s user name and passwords to access their accounts. However, what they learn, is that they are legally not permitted to do so.

A new law was passed in 2017 in California that attempted to bring order to this chaos. The Revised Fiduciary Access to Digital Assets Act allows executors and trustees to obtain disclosure of a person’s digital assets, after the original owner dies but only under certain conditions.

In the recent past, federal and state laws have made it hard for executors and trustees to gain access to these assets without a court order.

Just being the executor or trustee does not automatically give you the right to access assets. There must be evidence that the decedent consented to disclosure.

The new law mainly gave social media platforms and privacy advocates what they wanted: a requirement of prior consent before disclosure. However, the end result is that it is easier to gain access to digital assets, if executors and trustees can show that the decedent did consent to disclosure.

However, it’s still not that simple. Here are a few steps to help your loved ones deal with your digital assets:

Inventory every digital asset that you have. Create a list of log-in and password information, plus any “secret questions/answers.”

Tell your trusted family member or friend where that list is. Store it with your other estate planning documents, possibly in your attorney’s vault.

Do not include your digital asset inventory, as part of your will. If your estate goes through probate, all of your account information will become part of the public record.

An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and will most likely include digital assets. If you already have an estate plan, revisit the package with your estate planning attorney and take your digital assets into consideration.

11/20/2018

Advancing technology has brought us digital assets and they most likely are here to stay. Therefore, cryptocurrency investors need to know how to pass on those assets through the use of estate planning, according to ThinkAdvisor, in “4 Key Steps for Estate Planning with Cryptocurrencies.”

Here are a few facts about cryptocurrency assets:

Record Private-Key Custody and All Access Details. Digital currency is not the same as bank or investment accounts. The information can be lost permanently, if the investor fails to share the access information. Here’s what needs to be shared for most cryptocurrencies:

Private Key – A public-private key system is used to ensure transactional validity. The public key becomes public every time the cryptocurrency is bought and sold but only the owner knows the private key. This is used to verify ownership and access accounts. A physical record of the key must be created and maintained. Keeping it in a bank safety deposit box or home safe insulates the private key from hacking.

Passwords – Investors who do not secure their digital assets in “hardware wallets,” often have their cryptocurrency stored on default digital wallets provided by an exchange. The owner must share their user name, password and security question information with the exchange, so that digital assets can be retrieved.

Two-Factor Authentication – Many exchanges require investors to use two-factor authentication, usually via a mobile app that provides a unique time to gain access. User name, password and security system must be recorded for anyone else to access.

Use a Hardware Wallet. Once digital currency is purchased on an exchange, it is automatically stored on the exchange’s default wallet so the investor can access them. However, these default wallets are susceptible to hackers. Investors should immediately transfer their currency to a hardware wallet. Purchased online, they are generally encrypted flash drives that require a password or PIN code to gain access. If you lose that flash drive, or password or PIN code, you may have lost all the assets. However, some hardware wallets support 24-word recovery phrases to help investors restore their accounts. Investors are advised to buy a secondary hardware wallet and make an exact duplicate to have another means of access.

Uniform Fiduciary Access. Roughly 24 states have passed some version of the Uniform Fiduciary Access to Digital Access Act. These laws empower fiduciaries to manage digital assets. However, they may not yet provide that same level of power for cryptocurrencies.

Determine Tax Liability. The IRS treats digital assets as property, rather than currency for tax purposes, so any capital gains or losses in digital asset transactions must be reported. Many online digital asset exchanges provide data that tracks sales and purchases. However, they don’t always provide enough information to determine the tax basis. Record and save information on every transaction to be able to do the calculations on your tax liability.

11/08/2018

Americans are generally aware of the value of an estate plan in order to distribute assets and support the family. However, one of the newest form of assets can often be overlooked. Those assets are digital, according to Think Advisor in “The Big Hole in Estate Plans: Digital Assets.”

The person who now does not have an active online life is the exception. Many people don’t realize that they have substantial digital assets with both sentimental and financial value. Without a clear plan that specifies what someone wants to be done with these digital assets, there are both federal and state laws that can block loved ones—even those named executor or power of attorney—from accessing those assets.

Digital asset planning must now be part of every comprehensive estate plan to ensure that any disposition of a person’s wishes for these assets takes place.

The concept of estate planning for digital assets actually covers a broad range of assets from email to social media to PayPal, domain names, intellectual property and cryptocurrency. Some assets may only have sentimental value but others such as domain names or business contact lists in email accounts may also have significant monetary value.

Without a clearly documented plan, data privacy laws can prevent the online service provider from allowing an executor or family member access to these accounts. The Uniform Fiduciary Access to Digital Assets Act, which has been passed in most states, provides that an owner of digital assets can specify who can access and dispose of any digital assets after death.

If there has not been any planning, the online provider’s terms of service agreement, or TOSA, will control what happens to accounts after death. In some cases, TOSA will even override directions in a will or other document, especially when the service provider has provided specifications for how account holders are expected to make their post-mortem wishes known.

Note that instructions by a person using their online provider’s tools, will supersede any instructions in the will, so include these documents in the estate plan. They should be updated regularly.

People need to create comprehensive lists of all their digital assets, including instructions on how they want these assets to be handled after they die. They should list user names, passwords and security questions. Do not include this information in a will, because it can be accessed publicly during probate. A Trust will afford more privacy. They then need to review the TOSA and follow each platform’s rules for providing post-mortem access.

An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and will most likely include digital assets.

As soon as you have assets to pass down to loved ones, you need to start planning your estate. If you start in your early 20s, it will become a habit and an on-going process.

Even if you don’t have a lot of assets, it doesn’t mean that you’re excused from planning for the worst situation.

Whether you do a basic estate plan, like putting a will, revocable living trust, powers of attorney or a health care directive in place or if you need complex trusts and tax sheltering strategies, having an estate plan means you have a voice in what happens, even if you aren’t able to convey your wishes.

What do you need?

Everyone needs a will.

Everyone should review their beneficiary designations every few years to make sure the people named are still the people intended to receive the proceeds. That includes bank accounts, insurance policies, IRAs and more.

Everyone needs health care and financial power of attorneys to outline their wishes.

If you are a parent, in most states, you need a will to name guardians for your minor children. You also need a 529 College Savings plan to start saving for college, which comes up faster than you can imagine.

You may need a trust, which offers more privacy than a will, because it keeps details about your private belongings and assets out of probate court.

You also need to organize your digital assets, as well as your financial and physical assets. Keep a list of your accounts and passwords. Most digital platforms from Facebook to Google to your financial institutions, have policies about what happens to the accounts and who has access.

Keep a list of your advisors and their contact information. That includes your estate planning attorney, CPA and financial advisor. You may want to have them meet your family members, so they are more comfortable with these advisors, when the time comes for them to work together.

As you move through the various stages of life, your plan will change. However, you should get started now, so the process becomes second nature. Your family will thank you.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances.

Technology has given us new kinds of property and new laws that govern them. However, some of the old rules still apply and you need a will or trust. You need to name an executor or trustee, preferably both, ensuring that your assets are distributed, according to the wishes you state in your estate plan. When it comes to digital assets, things get a little tricky.

The hardest part of digital assets for many people, is how to give access to your digital property. The law has changed. If you own cryptocurrency, you’ll need to list your “crypto keys,” so your executor/trustee and heirs can know what is in your estate and be able to access it.

You may need to educate them, so they understand what the assets are, the location of the keys and access control that you use for security. You probably know access control as PINS, passphrases, multisignature or timeclock requirements.

The challenge is, if you die and no one has access to your cryptocurrency keys, your heirs may never be able to access them. They’ll need to know what exchanges you use (Bitcoin, Ethereum, and others) and a list of the digital wallets you own for each.

Most heirs want to sell the crypto property quickly, since the currency is volatile. No one wants to be criticized for losing substantive value in the estate, because they didn’t move quickly enough. They also don’t want to be brought to court, for failing to look out for the fiduciary interests of the estate.

You’ll need both the proper legal planning and technical planning.

Most states with laws about digital assets, have adopted a model that was written to include things that have not been invented yet.

Electronic signatures on wills, is another digital issue entering the estate planning arena. Most estate planning attorneys are proceeding cautiously. However, the change is coming, says an attorney on the drafting committee of the Uniform Law Commission.

National College of Probate Judges President Tamara Curry says she expects that judges are going to have to get up to speed on crypto assets in the next three to five years, since courts will become inundated with estates that include crypto currency and other digital assets.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and will most likely include some of the new kinds of property.

08/30/2018

There are the usual assets, when it comes to estate planning. However, in today’s world the online accounts in your name are rapidly rising in importance, according to the Journal of Financial Planning in “Don’t Forget Digital Assets in Estate Planning.”

If your will or trust hasn’t been updated in the past few years, chances are good it has no provision for your digital assets. This could create a larger problem than you’d think. Bank accounts, investment accounts and small business records stored in the cloud may not be accessible to heirs. That doesn’t even include the sentimental items: treasured photos and videos that never made it to paper or your computer’s hard drive.

Accounting for every single bit of data may be impossible for your heirs to recreate unless you provide them with a complete list of all online assets. However, that’s just for starters. With federal privacy laws, most Internet companies will not be able to assure that your heirs can access these accounts, unless arrangements have been made in advance.

This is a problem with a solution. However, it will take some work.

First, make sure your will or trust is up to date and includes information about providing access to your digital assets to your heirs. Do not put your passwords and user names in the will—remember, it becomes a public document at probate and you don’t want to give that information to the world at large! A trust remains much more private at your death but you still don’t want personal information in it.

Next, make a list of all online accounts. It will need to be thorough. You might start by going through sites you have bookmarked, because you use them often. Email updates from sites you subscribe to provide more information. A spreadsheet might be the easiest way to manage this data but there are also apps to assist. Last Pass is currently a decent solution.

Look at every account to find out what their rules are, after the owner’s death or incapacity. Each platform has its own rules. Facebook lets an immediate family member or personal administrator close the account or “memorialize” it. Someone must be identified as a “legacy” contact, who can post an obituary on the Facebook timeline, archive photos and eventually close the account. Google also has an “inactive account manager” feature. Each platform has its own rules. You’ll need to review them and act as directed.

Bear in mind that some platforms will delete the accounts, if they are inactive over a certain period of time. That could mean losing business emails and many family businesses rely on one person’s email account.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and how to address digital accounts.

04/26/2018

Some state legislators have been working to create laws that entitle families of deceased loved ones to gain access to digit accounts, despite refusal from tech companies to cooperate. An important victory in this fight was recently won by a family, according to the Wills, Trusts & Estates Prof Blog in "Ajemian v. Yahoo! Case Update."

The case comes out of Massachusetts, where a law was enacted that allowed the personal representative of an estate to authorize access to the deceased's email account. When that was attempted in this case the email provider, Yahoo!, refused the access.

A lawsuit over the matter went to the Massachusetts Supreme Court. The family won a partial victory. The case was appealed to the U.S. Supreme Court, which declined to hear it. As a result, the decision in Massachusetts will stand.

There is still some litigation to be completed in the case, but it is an important victory for now.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and may include digital accounts.

This raises an interesting question. If people now going to have what amounts to a public funeral via social media, could they possibly plan for those funerals in the same way they now plan for their more traditional funerals?

In some ways they already can. For example, people can now designate a legacy contact for their Facebook accounts. Who knows, in the future people may designate a Twitter hashtag they would like used for expressions of grief.

The Internet has not just changed how we grieve over death. It has also changed how we should plan for our estates.

Detailing how our digital accounts are handled after we pass away is an increasingly vital part of estate planning.

12/28/2017

Canadian widow Peggy Bush shared an iPad with her late husband and, unfortunately, she did not know her husband's Apple ID. She liked to play a card game on the iPad but is now facing some strict policies.

When she began having problems with the game her family decided to try reinstalling the game and her daughter called Apple. She was initially told she would need to produce her father's will and death certificate to get the password. When those were procured, Apple still refused to help.

Many phone calls later the family was told by Apple that they would need to get a court order for Apple to give them the password.

This is becoming a very common problem, and not just with Apple. Tech companies each have their own policy concerning when they will allow access to a deceased person's account. Despite the often express wishes of the deceased some companies will never allow access to accounts without a court order.

With business and financial transactions increasingly taking place online executors and family members often need account access to handle the estate.

State legislators across the county are attempting to come up with a solution to this problem.

The best practice may be to work with an estate planning attorney to make sure the executor of your estate has a way to learn your account passwords.